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June 28, 2026 — 5:01am
For unabashed finance nerds like myself, the end of one financial year and the start of another is always a bit like Christmas. Suddenly, everyone is celebrating something we’re extremely into all-year round.
In Australia, though, our tax system has long been pretty confusing and unnecessarily complex for the average person to navigate. And though there have been many improvements to make it simpler and easier, there are always new things to be aware of.
During a period of sustained cost-of-living pressures especially, it’s entirely understandable that people are itching to see if they’ll get a nice return or a naughty bill.
But before you sit down and hit the “lodge return” button, here are some things to get across.
The use of AI is here to stay – consider yourself warned
For a while now, the ATO has been using increasingly sophisticated analytics, AI systems and data matching to compare the information it has on file against the information you’ve included in your return.
Unlike the olden days, when human auditors had to pore over individual files looking for inconsistencies with a red pen, the new process is infinitely faster and more sophisticated. That might sound scary, but as long as you can explain your claims, you’ll be OK.
If you are thinking about doing anything sneaky or hoping to outsmart the ATO this year, I’d seriously suggest you think twice.
Such cross-referencing covers an awful lot a lot of ground – from your health insurance, PAYG summaries, superannuation contributions and banking information to property transactions, share and investing accounts such as cryptocurrency, and platforms tied to the gig economy, including Airbnb, Uber and Airtasker.
As I said, it’s pretty sophisticated. Of the lodgments made in 2024-25, data matching was able to pick up discrepancies when it came to over-claiming deductions or missing income so successfully that 595,000 returns needed to be adjusted. So, if you are thinking about doing anything sneaky or hoping to outsmart the ATO this year, I’d seriously suggest thinking twice.
Don’t claim the wrong things
Just as it is critical to ensure you claim everything you’re eligible to claim, and do so correctly, it’s equally important to ensure you’re not claiming things you shouldn’t claim.
This includes unusual deductions (such as a courier driver who tried to claim a pair of Speedos, which the auditors rejected) or excessively large items, as in the case of someone who tried to write off $17,000 in baby clothing (they didn’t succeed).
Another thing to get across is claiming items that are no longer on offer. For example, at the height of the COVID-19 pandemic, when many of us were working from home a lot, temporary claim measures were introduced.
Back then, most of us were working from home five days a week, but now most employers report workers being in the office at least three days a week. So, if you attempt to claim 100 per cent of your home internet, mobile phone or heating and cooling bills, know there’s a good chance you’ll be hearing from an auditor who has a few questions.
According to the ATO, the most common claims last year were car expenses ($11.9 billion claimed by 3.9 million individuals), travel expenses ($2.7 billion claimed by 1.7 million people), clothing ($2.4 billion claimed by 7 million people) and self-education ($1.9 billion claimed by 1.1 million).
Don’t file too early – or too late
As great as the temptation is to find out on July 1 or shortly after how much money you’ll get back or the size of the bill you’ll need to foot, there are reasons against lodging your return in those first few days of the new financial year.
For starters, the ATO specifically asks you not to do that because rushed tax returns tend to be among the hundreds of thousands that end up needing adjustments.
Second, by giving it a couple of weeks, you’re allowing your employer, health insurer, superannuation company and other relevant bodies enough time to file their documents to the ATO, and the ATO enough time to pre-fill most of the information it needs to make things quicker for you.
Having said that, you shouldn’t wait too long either because putting it off could cost you dearly. This year, the deadline for lodging a statement is October 31. After that, you’ll begin to face fines that start at $330 and increase as time goes on, all the way up to $1650. You could also be subject to what’s called General Interest Charges (GIC), levied at 11.43 per cent and compounding daily.
Yes, big changes are coming, but not just yet
If you think a number of significant tax changes are heading our way and you need to wrap your head around them, you’re right. But the changes announced by the federal government as part of this year’s budget don’t actually apply this financial year.
Among those changes, which passed the Senate earlier this week, the Working Australians Tax Offset (WATO) – which is a $250 tax offset – is scheduled to kick in from July 1, 2027. This will work by directly reducing the amount of tax you owe at the end of the financial year. So, say you were due to pay $1000 in tax, that will fall to $750 once the WATO is applied.
Changes to capital gains tax are also coming, under which the existing 50 per cent flat rate resets to a 30 per cent minimum rate and an inflation indexation method. This will be especially relevant to anyone with an investment portfolio that includes shares and ETFs. It also kicks in from July 1, 2027.
The final change to remember is the $1000 instant tax deduction, which will replace the current limit for receipt-free deductions of $300. It is due to kick in during the 2026-27 financial year.
The good news is that you’ve got at least another 12 months up your sleeve to get across what these changes are and how they will apply to your financial situation before we’re back here again next year.
Victoria Devine is an award-winning retired financial adviser, a bestselling author and host of Australia’s No.1 finance podcast, She’s on the Money. She is also founder and director of Zella Money.
- Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their personal circumstances before making any financial decisions.
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